CIArb News

London Branch Seminar: The Use of ADR in Professional Indemnity Claims

19 Mar 2019

The event was hosted by DWF LLP.  Speaking were Sir Rupert Jackson, former Lord Justice of Appeal and now an international arbitrator, Perry Granof FCIArb, Managing Director of Granof International Group LLC, which provides specialist professional indemnity insurance consulting services, and Andrew Davis FCIArb, former partner in DWF LLP who has defended many professionals in liability claims, acted in numerous arbitrations, and is also an arbitrator.

Paul Rose welcomed attendees and introduced the distinguished panel of speakers.

Andrew Davis reviewed how the professional indemnity world had used ADR to date.  He defined a professional indemnity claim as involving an alleged failure to perform a professional responsibility to the required standard where such failure has caused loss, and noted that the claim can be for negligence and breach of contract.  The crash of the early 1990s and the credit crunch of 2017 provided a large volume of claims on surveyor’s valuations, which stimulated the use of ADR.  In his experience, arbitrations are few, but mediation and non-binding expert determination is popular, as is the construction adjudication scheme, for claims against industry professionals.   

Perry Granof focused on the USA, where the ADR options are mediation, arbitration or a settlement conference with a judge.  Mediation has been very useful in class actions over Directors’ & Officers’ liability and insolvency cases, where the costs of litigation are huge.  Arbitration has been popular in specialist areas such as reinsurance, where the parties may feel a judge may not appreciate the nuances. Arbitration is likely to increase in significance for disputes between insurers and reinsurers.  There may be openings for neutrals outside that world to gain appointments with some training as they may be preferred to industry insiders.    

Sir Rupert Jackson identified a powerful public interest in the early resolution of professional indemnity claims, as increases in insurance premiums spread the liability across professions and to the general public. Sir Rupert authored the Jackson Report on reforms leading to cost reduction in areas such as personal injury, where after-the-event insurance premiums and success fees ceased to be recoverable. He does not consider this to be necessary for professional indemnity claims. ADR is important because cost reduction initiatives can only go so far.  He is a fan of construction adjudication, and thinks adjudication is useful in a professional indemnity context, but it should be incorporated earlier than the Pre-Action Protocol letter.  He recommends inclusion of a short hearing.  As regards mediation, this may not be suitable where a party needs vindication, but works well where the dispute is really about money.     

There followed an enthusiastic Q&A session.   A drinks reception was generously hosted by DWF LLP, with spectacular views from their offices in the “Walkie Talkie” Building at 20 Fenchurch Street.

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